How American Health Care Killed My Father
By David Henderson
Not my father: David Goldhill’s father. In this stemwinder, Goldhill goes through some of the wacky incentives with which our health care system is laced. The title is somewhat misleading: although he does establish that American health care killed his father, most of the article is about incentives and he doesn’t literally establish that the result for his father would have been different had the incentives been better. Still, it’s a first-rate article, with keen insights on virtually every page.
All of the actors in health care–from doctors to insurers to pharmaceutical companies–work in a heavily regulated, massively subsidized industry full of structural distortions.
To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance;
For fun, let’s imagine confiscating all the profits of all the famously greedy health-insurance companies. That would pay for four days of health care for all Americans. Let’s add in the profits of the 10 biggest rapacious U.S. drug companies. Another 7 days.
If seniors were the true customers, they would likely flock to geriatricians, bidding up their rates–and sending a useful signal to medical-school students. But Medicare is the real customer, and it pays more to specialists in established fields.
Health care is an exceptionally heavily regulated industry. Health-insurance companies are regulated by states, which limits interstate competition. And many of the materials, machines, and even software programs used by health-care facilities must be licensed by state or federal authorities, or approved for use by Medicare; these requirements form large barriers to entry for both new facilities and new vendors that could equip and supply them.
Better information technology would have improved my father’s experience in the ICU–and possibly his chances of survival.
But my father was not the customer; Medicare was.
I don’t agree with all of his solutions. He wants to force everyone to buy health insurance and he wants the deductible on health insurance to be $50,000! I buy my daughter’s catastrophic health insurance plan, one for which neither she nor I gets a tax break–so you can’t accuse the tax system of causing us to overconsume–and we have chosen an annual deductible of $5,000. Nevertheless, his powerful article is worth reading.